Blog

Some Highlights

• Sometimes it helps to see the dollars and cents you’ll save when you purchase a home while mortgage rates are low.
• Today’s low rates mean it’s less expensive to borrow money, so the savings over the life of your loan is significant.
• Let’s connect to determine the best way to position your family for a financially-savvy move in today’s market.

With so few houses for sale today and low mortgage rates driving buyer activity, bidding wars are becoming more common. Multiple-offer scenarios are heating up, so it’s important to get pre-approved before you start your search. This way, you can put your best foot forward – quickly and efficiently – if you’re planning to buy a home this season.

Javier Vivas, Director of Economic Research at realtor.com, explains:

“COVID-19 has accelerated earlier trends, bringing even more buyers than the market can handle. In many markets, fierce competition, bidding wars, and multiple offer scenarios may be the common theme in the weeks to come.”

Here are three things you can do to make your offer a competitive one when you’re ready to make your move.

1. Be Ready

A recent survey shows that only 52% of active homebuyers obtained a pre-approval letter before they began their home search. That means about half of active buyers missed out on this key part of the process.

Buyers who are pre-approved are definitely a step ahead when it’s time to make an offer. Having a pre-approval letter indicating you’re a qualified buyer shows sellers you’re serious. It’s often a deciding factor that can tip the scale in your direction if there’s more than one offer on a home. It’s best to contact a mortgage professional to start your pre-approval process early, so you’re in the best position right from the start of your home search.

2. Present Your Best Offer

In a highly competitive market, it’s common for sellers to pick a date and time to review all offers on a house at one time. If this is the case, you may not have an opportunity to negotiate back and forth with the sellers. As a matter of fact, the National Association of Realtors (NAR) notes:

“Not only are properties selling quickly, but they are also getting more offers. On average, REALTORS® reported nearly three offers per sold property in July 2020.”

Make sure the offer you’re presenting is the best one the sellers receive. A real estate professional can help you make sure your offer is a fair and highly competitive one.

3. Act Fast

With existing homes going like hotcakes, there’s no time to waste in the process. NAR reports how the speed of home sales is ramping up:

“Properties typically remained on the market for 22 days in July, seasonally down from 24 days in June and from 29 days in July 2019. Sixty-eight percent of homes sold in July 2020 were on the market for less than a month.”

In addition, NAR notes:

“Total existing-home sales…jumped 24.7% from June to a seasonally adjusted annual rate of 5.86 million in July. The previous record monthly increase in sales was 20.7% in June of this year. Sales as a whole rose year-over-year, up 8.7% from a year ago (5.39 million in July 2019).”

As you can see, the market is gaining steam. For two consecutive months houses have sold very quickly. Essentially, you may not have time to sleep on it or shop around when you find a home you love. Chances are, someone else loves it too. If you take your time, it may not be available when you’re ready to commit.

Bottom Line

The housing market is very strong right now, and buyers are scooping up available homes faster than they’re coming to market. If you’re planning to purchase a home this year, let’s connect to discuss the trends in our current area, so you’re ready to compete – and win.

One of the biggest surprises of 2020 is the resilience of the residential real estate market. Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), is now forecasting that more homes will sell this year than last year. He’s also predicting home sales to increase by 8-12% next year. There’s strong evidence that he will be right.

ShowingTime, a leading showing software and market stat service provider for the residential real estate industry, just reported on their latest the ShowingTime Showing Index:

“Home buyer traffic jumped again in July, recording a 60.7 percent year-over-year increase in nationwide showing activity.”

That means there are 60% more buyers setting appointments to see homes than there were at this same time last year. The number of potential purchasers was also up dramatically in every region of the country:

• The Northeast was up 76.6%
• The West was up 56.7%
• The Midwest was up 52.1%
• The South was up 46.7%

The Housing Market Is Showing a ‘V’ Type Recovery

ShowingTime also indicates the real estate market has already come back from the downturn earlier this year that was caused by shelter-in-place orders. Here are the year-over-year numbers for each region on a monthly basis (See graph below):We’re way ahead of where we were at this time last year. This data validates the thoughts of Frank Martell, President and CEO of CoreLogic, who recently noted:

“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic.” 

Bottom Line

If you’re thinking about selling your house, this may be a great time to get the best price and the most favorable terms.

Earlier this year, realtor.com announced the release of the Housing Recovery Index, a weekly guide showing how the pandemic has impacted the residential real estate market. The index leverages a weighted average of four key components of the housing industry by tracking each of the following:

1. Housing Demand – Growth in online search activity
2. Home Price – Growth in asking prices
3. Housing Supply – Growth of new listings
4. Pace of Sales – Difference in time-on-market

The index compares the current status “to the January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”

The graph below charts the index by showing how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. It also shows the strength of the recovery since the beginning of May.Today, the index stands at its highest point all year, including the time prior to the economic shutdown.

The Momentum Is Still Building

Though there is some evidence that the overall economic recovery may be slowing, the housing market is still gaining momentum. Zillow tracks the number of homes that are put into contract on a weekly basis. Their latest report confirms that buyer demand is continuing to dramatically outpace this same time last year, and the percent increase over last year is growing.Clearly, the housing market is not only outperforming the grim forecasts from earlier this year, but it is also eclipsing the actual success of last year.

Frank Martell, President and CEO of CoreLogic, explains it best:

“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic.”

Bottom Line

Whether you’re considering buying or selling, staying on top of the real estate market over the coming months will be essential to your success.

When you are shopping for a home, selling it later may not cross your mind. But it should! Purchasing a home is a major investment. You want your new house to meet your current needs while also providing future resale value. Think of it as protecting your investment.

What are the most important factors? Since every real estate market is different, the answer varies. Wherever you’re shopping for a home, your Accredited Buyer’s Representative can provide vital local perspectives on resale value.

Generally speaking, you want your home to appeal to the largest number of future buyers. Factors to consider:

1. Number of bedrooms

Bedrooms are essential for sleeping, but they also offer potential space for a home office, craft room, music studio, exercise space, or guest room. 

2. Number of bathrooms

Homes with only one bathroom can be at a significant disadvantage when competing against dwellings with two or more baths. In some high-end markets, each bedroom should have a dedicated bathroom.

3. Single-floor living

As the U.S. population ages, more future buyers will consider one-floor living essential. That means at least one main bedroom and a full bathroom are located on the main floor, and a laundry area.  

4. Storage

Large closets, attic space, basements, garages, and other storage areas will make a home more attractive to future buyers and provide a more enjoyable living experience for you too.

5. Living area layout

Open floor plans that join the kitchen, dining, and living room spaces have been popular in recent decades. It’s an excellent way to make homes feel larger and allow a free flow of traffic and conversation in a home.  

While open floor plans are generally viewed as a positive resale factor, they are not well suited to carving out private spaces for working from home, reading, and studying. These activities have taken on greater importance during the coronavirus pandemic. Time will tell if buyers become less enamored with open floor plans.

6. Location, location, location

Convenient access to shopping, dining, good schools, parks, and other amenities will help preserve or increase your home’s value. Neighborhood features that typically boost resale value include walking trails, good sidewalks, community pools, and recreation centers.

Also, consider access to major streets and highways, as well as public transportation options. While it’s difficult to predict how the pandemic will impact future work-from-home trends, ease of commuting has traditionally been a critical resale value consideration.

7. Size of yard

Large lots may require a bigger landscaping budget and extra maintenance chores. But they also provide options to expand living spaces beyond your home, including patios, decks, vegetable gardens, and play areas. If two homes are virtually identical, your resale value will probably improve if you select the one with more exterior space and rely on resale-friendly landscaping.

8. Noise

Sipping coffee on the deck will be less enjoyable if you live near a busy road or a local airport’s flight path. Noise pollution can also be a problem inside your home, especially if you want to open your windows for fresh air.   

9. Total square footage

Size matters, but it may be a bad idea to buy the biggest house in a neighborhood. A small or medium-sized home in an area filled with larger homes can provide a better return on your investment.

10. Future development

If the land beyond your home is undeveloped, find out how it is zoned and consider how your views may change. Also, research government plans to add or widen roads in your community or build new facilities.

New developments can have positive or negative effects on your future resale value. A new park for the kids? Winner! A new four-lane road in the field behind your home? Ouch!

Similarly, urban dwellers should consider whether nearby lots might become multi-family structures, potentially blocking sun and views and limiting street parking options.

Some Highlights

• The percentage of income needed to afford a median-priced home today is declining, while that for renting is on the rise.
• This is making buying a home an increasingly attractive option for many people, especially with low mortgage rates driving purchasing power.
• Let’s connect if you’d like expert guidance on exploring your homebuying options while affordability is high.

Today, home prices are appreciating. When we hear prices are going up, it’s normal to think a home will cost more as the trend continues. The way the housing market is positioned today, however, low mortgage rates are actually making homes more affordable, even as prices rise. Here’s why.

According to the Mortgage Monitor Report from Black Knight:

“While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing the average-priced home the most affordable it’s been since 2016.”

How is that possible?

Black Knight continues to explain:

“As of mid-July, it required 19.8% of the median monthly income to make the mortgage payment on the average-priced home purchase, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the average of 25% from 1995-2003.

This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period.

In fact, buying power is now up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.”

This is great news for the many buyers who were unable to purchase last year, or earlier in the spring due to the slowdown from the pandemic. By waiting a little longer, they can now afford 10% more home than they could have a year ago while keeping their monthly mortgage payment unchanged.

With mortgage rates hitting all-time lows eight times this year, it’s now less expensive to borrow money, making homes significantly more affordable over the lifetime of your loan. Mark Fleming, Chief Economist at First American, shares what low mortgage rates mean for affordability:

“In July, house-buying power got a big boost as the 30-year, fixed mortgage rate made history by moving below three percent. That drop in the mortgage rate from 3.23 percent in May to 2.98 percent in July increased house-buying power by nearly $15,000.”

The map below shows the last time homes were this affordable by state:In six states – Arkansas, Iowa, Kentucky, Louisiana, Maryland, and West Virginia – homes have not been this affordable in more than 25 years.

Bottom Line

If you’re thinking of making a move, now is a great time to take advantage of the affordability that comes with such low mortgage rates. Whether you’re thinking of purchasing your first home or moving into a new one and securing a significantly lower mortgage rate than you may have on your current house, let’s connect today to determine your next steps in the process.